TEA PARTY NOT DEAD — The primary season thus far has mainly dealt stinging defeats to Tea Party-backed candidates. Not so last night in Texas, where state Sen. Dan Patrick (not the sportscaster) took down incumbent Republican Lt. Gov. David Dewhurst and seventeen-term GOP Rep. Ralph Hall fell to former U.S. Attorney John Ratcliffe, who enjoyed backing from conservative groups including the Club for Growth. It was the second run-off defeat for Dewhurst who in 2012 lost to Ted Cruz for the GOP Senate nomination.

These races help remind us that the Tea Party movement retains potency even as establishment Republicans and business groups rack up wins defending incumbents and nominating more business-friendly candidates in some primaries. Still, it’s easy to read too much into an LG race in Texas and the primary defeat of the oldest member of the House. And Hall, who enjoyed plenty of Tea Party support, was hardly a raging moderate … Here’s POLITICO’s Jose DelReal on Dewurst: http://bit.ly/1nSpoCb and Hall: http://bit.ly/RzERw8

Story Continued Below

ONE REASON WHY TEA PARTY NOT DEAD: CEO PAY — WSJ’s Theo Francis and Joann Lublin: “For most CEOs at big companies, pay is rising moderately and awards are increasingly tied to future financial performance. But that doesn't apply to everybody. The Wall Street Journal's annual compensation survey found that … the biggest rewards go to a relative handful of executives at the very top, and that their pay doesn't necessarily correlate to their company's size or results. … [T]he top 10 percent by pay earned 23 percent of the total compensation, while the bottom 30 percent accounted for just 13 percent of the total.

“The three highest-paid CEOs — Oracle Corp.'s Larry Ellison, CBS Corp.'s Leslie Moonves and Liberty Global PLC's Michael T. Fries — made a total of $188 million, more than the combined pay of the 50 CEOs at the bottom of the same list. … Pay across the survey rose by a median 5.5 percent to $11.4 million … The increase trailed the companies' median profit rise of 8 percent … It did, however, outstrip growth in compensation for ordinary employees. Wages and salaries for U.S. private-sector workers rose an average of 1.8 percent in 2013, according to the Labor Department.” http://on.wsj.com/SNqHsz

M.M. SIDEBAR — Numbers like the ones above help explain why there is still a fairly clear lane in the GOP for conservative populists who can tap into general frustration at middle-class wage stagnation in the face of such staggering numbers at the top. What’s much less clear is whether it’s a lane that leads to a presidential nomination, as people like Sen. Rand Paul (R-Ky.) clearly hope. Generally, GOP nominees need to appeal to establishment business groups in addition to more ideologically focused conservatives. Maybe 2016 is the year that changes but it’s a bit tough to see it right now.

HOT READ: WALL STREET AND THE CBC — HuffPo’s Ryan Grim and Zach Carter go long on the Congressional Black Caucus’ relationship with Wall Street: “The assault on Dodd-Frank relies on support from three different groups. The GOP isn't shy about its antipathy to government regulations, and a pro-business coalition known as the New Democrats has come to its aid. But there is also a third, lesser-known faction: the Congressional Black Caucus. [Gwen] Moore, along with colleagues such as New York's Gregory Meeks, Georgia's David Scott, Missouri's Lacy Clay and Alabama's Terri Sewell, has pushed for a host of seemingly arcane measures that would undermine Dodd-Frank's rules on financial derivatives …

“The CBC is not an organization known for airing its dirty laundry in public. But over the last year, the tawdriness of its pro-Wall Street votes has become so blatant that several members have started to push back, led by Maxine Waters, the veteran Los Angeles legislator who serves as the top Democrat on the financial services panel. To many in the CBC, it feels like a battle for the storied caucus's soul — and the result could dictate the direction of economic policy for the Democratic Party at large.” http://huff.to/1nSriCQ

DON’T CELEBRATE HOUSING NUMBER — Pantheon’s Ian Shepherdson: “We don’t believe for a minute the Case-Shiller data showing that existing home prices rose 1.2 percent in March, lifting the three-month annualized rate to 12.0 percent. The numbers are compromised … by their failure properly to strip out distressed sales from the sample. Easter-related seasonal problems might also have affected the data. Either way, the Case-Shiller numbers contradict all the other housing market numbers we follow, which show activity and home prices slowing or falling outright since mortgage rates surged last spring."

OR MAYBE CELEBRATE IT? — NYT’s Shaila Dewan: “A steep gain in home prices in many markets that helped lift millions of Americans out of the red on their mortgages is now markedly slowing … But analysts said that the softening of price gains, rather than a worrisome trend, may actually be welcome news. Double-digit increases cannot go on forever, and many economists are using words like ‘sustainable’ and ‘stable’ to describe the slowdown, saying the market is becoming healthier.” http://nyti.ms/1jZcFQ2

PICKETTY FELT “AMBUSHED” — Newsweek’s Leah McGrath Goodman: “French economist Thomas Piketty stands by his best-selling book Capital in the Twenty-First Century, and says the Financial Times published a scathing analysis questioning the data without giving him nearly enough time to answer its criticisms … Piketty, who posted his data spreadsheets online for all to see, told Newsweek in an email this morning Giles gave him less than a day to respond to questions about his data and methodology used in his expansive, 696-page book, as well as his voluminous spreadsheet data. …

“‘He didn’t give me proper time to respond (less than 24 hours) and most of all the mail he sent me did not include a large part of the material that they were going to publish,’ he said to Newsweek in the email. ‘I maintain that there’s no error or flaw in my series.” http://bit.ly/1mBGmW2

RISE OF THE SHOWBOAT DONOR — POLITICO’s Kenneth P. Vogel from the SALT conference in Las Vegas: “Anthony Scaramucci was in his element. The fast-talking hedge fund manager, who stands about 5 feet 8 inches on a good day, was recounting for a small clutch of well-wishers the conversation he’d just had with Magic Johnson … His back-slapping braggadocio and shrewd marketing — he’s a regular CNBC contributor who is starting his own weekly TV show — have made him a star on Wall Street. … And his big giving and ability to get his pals on the street to do the same have made him a big deal in Republican finance circles.

“The Mooch … is now seen as a validator who can steer major Wall Street money to hedge funds and super PACs alike. He’s courted by fund managers and ambitious Republican politicians and big-money operatives like Paul Ryan, Scott Brown and Karl Rove. His SALT Conference … is a major to-do: a self-styled Davos meets Wolf of Wall Street that attracts top names from Hollywood, sports and politics. A-listers who spoke this year included Magic, Blair, Brown, Rove, Ryan, Spacey, Valerie Jarrett, David Petraeus, David Plouffe and Larry Summers.” http://bit.ly/1jZALIY

THIS MORNING ON POLITICO PRO FINANCIAL SERVICES – Joseph Marks on possible cybersecurity threats facing banks from Russia [ http://politico.pro/1wi4P82] … Kate Davidson on Christine Lagarde’s take on the state of financial regulation [ http://politico.pro/1ntbDhz] … Pro's subscriber-only coverage — and to get Morning Money every day before 6 a.m. — please contact Pro Services at (703) 341-4600 or info@politicopro.com.

GOOD WEDNESDAY MORNING — Want to see the worst first pitch in baseball history? Watch 50 Cent’s absurdly errant toss at Tuesday’s Mets game http://yhoo.it/1kJn6pB

WANT TO SEE THE FUTURE OF DRIVING? — It might be this driverless Google car. Or it may not be. These cars could become sentient and destroy us. It’s hard to know. http://bit.ly/1mo7HJw

DRIVING THE DAY — President Obama visits West Point where he will deliver the commencement address outlining his current foreign policy goals including the Afghan drawdown timeline … The National Council of La Raza at 9:30 a.m. releases a report on financial access for low-income consumers … Former Treasury Secretary Hank Paulson interviews former Treasury Secretary Tim Geithner tonight at 5:00 p.m. in Chicago … Sen. Elizabeth Warren (D-Mass) hits the 2014 train in Portland, Oregon for a fundraiser for Sen. Jeff Markley (D-Ore.) … Mortgage applications out at 7:00 a.m.; Redbook chain store sales at 8:55 a.m. … Treasury Secretary Jack Lew meets with Obama at the White House …

SIREN: WALL STREET PROFIT WARNING — WSJ’s Saabira Chaudhuri: “Executives from some of the biggest U.S. financial firms said a slump in trading that has hammered bank results for more than a year is likely to continue to weigh on profits. Large investors are retreating from the market, big trades are rare and price swings are shrinking, executives told investors at an industry conference … Those factors have combined to reduce trading revenue, particularly in fixed-income, currencies and commodities trading, traditionally a profit engine for large banks. …

“The comments follow several quarters of disappointing results in trading. Aside from Citigroup and J.P. Morgan, Goldman Sachs and Bank of America also have struggled as trading slowed. Some investors have begun to worry that the slowdown may be more than a temporary phenomenon. Some have expressed concern that the decline could be more permanent as regulators limit banks' own trading and risk-taking in general. … J.P. Morgan this month said that it expects its markets revenue to drop 20 percent in the second quarter. … J.P. Morgan Chief Executive James Dimon has said he expects the trading business to expand over time.” http://on.wsj.com/1km0YSt

CITI WARNS OF 25 PERCENT TRADING DROP — FT’s Camilla Hall in New York: “Citigroup’s chief financial officer John Gerspach warned … that total trading revenue could drop as much as 25 per cent in the quarter from a year ago, making it the second Wall Street bank to prepare investors for weakness. Mr Gerspach’s forecast chimes with that of JPMorgan Chase, which said earlier this month that trading revenue could decline by about 20 per cent this quarter … In the first quarter, US banks reported their worst start to the year in fixed-income trading since the financial crisis, fuelling the debate over whether the prolonged weakness is a cyclical or secular shift in the way big banks are making money.

“Other key parts of the business are also looking sluggish. Mr Gerspach warned that global consumer banking revenues would be ‘roughly flat’ in the second quarter compared with the previous quarter at $9.3bn, marking a 4 per cent decline from a year earlier. … Last month, Citi made deeper cuts at its investment bank, axing around 200 to 300 staff in its global sales and trading businesses as the US lender prioritises cost-cutting and meeting its efficiency targets.” http://on.ft.com/1mC6joq

M.M. FLASHBACK — Some mocked us at the time but M.M. wrote in January that Dodd-Frank and other regulatory changes would cut deeply into profits at Wall Street’s biggest banks. http://politi.co/LmRGYx

TALLYING THE COST OF FIXING DETROIT — WSJ’s Monica Davey: “A task force convened by the Obama administration issued the most detailed study yet of blight in Detroit … and recommended that the city spend at least $850 million to quickly tear down about 40,000 dilapidated buildings, demolish or restore tens of thousands more, and clear thousands of trash-packed lots. It also said that the hulking remains of factories that dot Detroit … must be salvaged or demolished, which could cost as much as $1 billion more. If carried out, the recommendations by the Detroit Blight Removal Task Force would drastically alter the face of the nation’s largest bankrupt city.

“They would also cost significantly more than the approximately $450 million that the city already plans to spend on blight, raising questions about the feasibility of the vast cleanup effort, which is part of its larger campaign to emerge from bankruptcy by fall … And the recommendations are certain to raise pointed questions on the streets of Detroit about which neighborhoods will be helped first, and which will have to wait.” http://nyti.ms/TS7WF2

SEC PLANS NEW ENERGY PAYMENT DISCLOSURE RULE — POLITICO’s Alex Guillen: “The Securities and Exchange Commission is back to work on a new version of a Dodd-Frank rule requiring energy and mining companies to disclose payments made to foreign governments. The agency revealed it plans to issue a notice of proposed rulemaking by March 2015 in the administration’s new Unified Agenda, released quietly on Friday.”

TRANSITIONS: TREASURY’S DICK GREGG RETIRES — The Hill’s Vicki Needham: “A long-time Treasury official who came out of retirement to help after the financial crisis is leaving the department after more than 40 years. Treasury announced Tuesday that Dick Gregg, fiscal assistant secretary, will depart after 41 years in several different senior management positions. ‘Dick has been a tremendous leader for the government’s fiscal operations, helping to bring about changes that have revolutionized government transactions despite incredibly tough economic and budgetary circumstances,’ Treasury Secretary Jack Lew said …

“Following his departure, David Lebryk, who is the commissioner of the Bureau of the Fiscal Service will take over for Gregg while Sheryl Morrow, who is the deputy assistant secretary for fiscal operations and policy at Treasury, will succeed Lebryk.” http://bit.ly/1tkvJrz

HOT READ II — TNR’s David Dayen: “Ta-Nehisi Coates’ brilliant essay, ‘The Case for Reparations,’ recounts centuries of ongoing and persistent racism in America. … But Coates in large part illustrates formal racism by looking at housing policy, specifically in the Chicago neighborhood of Lawndale in the 1960s. … [A]s Coates points out, African-Americans were simply cut off from that [wealth building through home ownership] opportunity, broadening a racial wealth gap that exists to this day.

“It’s worse than he describes. The Fair Housing Act of 1968 ended government redlining and segregation, allowing black families to accumulate wealth through homeownership. For subprime lenders, this was quickly seen as a prime opportunity: a largely low-income community struggling with stagnant wages and a rising cost of living, whom they could persuade to use their homes like an ATM.. As far back as 1993, African-Americans were five to eight times more likely to hold subprime loans than whites.” http://bit.ly/1tkxu8b

McCULLEY RETURNS TO PIMCO — Reuters: “Pimco said on Tuesday it has rehired Paul McCulley, who was previously a portfolio manager and the bond giant's top analyst of the U.S. Federal Reserve's policies, in the latest management change after the departure of the firm's chief executive Mohamed El-Erian … The firm, which oversaw $1.94 trillion at the end of March, said McCulley will be its chief economist, a newly created role, and will report to Bill Gross, co-founder and chief investment officer.

ROYCE RIPS ALLERGAN BID — Per letter to the SEC from Rep. Ed Royce (R-Calif.): “You have to give the Allergan bidders credit for being creative. This is the first shadow shareholder referendum of its kind filed at the SEC, and it’s at the expensive of shareholder transparency. My immediate concern is that the SEC performs a thorough review of the details of this filing with that transparency in mind” Full letter: http://1.usa.gov/1nS0vGT

AMERICANS STILL WORRIED ABOUT U.S. DEBT — Per Peter G. Peterson Foundation: “The Fiscal Confidence Index, modeled after the Consumer Confidence Index, is 44 (100 is neutral), indicating voters ongoing concern about addressing our long-term fiscal outlook. Fully eight in ten voters (81 percent) say that the President and Congress should spend more time addressing the issue, including six in ten (62 percent) who believe they should be spending a lot more time on it.” http://bit.ly/1pwcPgU

SOME SENATE GOPers WANT NEW “CONTRACT” — POLITICO’s Manu Raju: “A faction of Republicans including Sen. Lindsey Graham is agitating for party leaders to unveil a policy manifesto in the midterm elections, detailing for voters what the GOP would attempt with a Senate majority … Advocates of the strategy, which has triggered a closed-door debate in recent weeks among the party’s current 45 senators, say it would serve as a firm rejoinder to Democrats casting the GOP as the ‘party of no.’ They say voters should know what they’d be getting by pulling the lever for Republicans in November.

“With many election handicappers pegging a Senate takeover as a better than 50-50 proposition, the quandary of how specific they should get during the campaign underscores the difficulties Senate Republicans face transitioning from opposition party to governing party. While Republicans are in broad agreement over their principles, such as repealing Obamacare and opposing higher taxes, a new GOP majority would have its own challenges unifying behind an ambitious agenda.” http://bit.ly/1pwdLlF

GET SMART FAST on electronic health records, telemedicine, health apps and federal health IT with POLITICO’s Morning eHealth newsletter. POLITICO Pro eHealth, launching June 3, will give you the latest policy developments from the intersection of health care and technology. Know what the #ProsKnow by signing up for the must-read tipsheet here: http://bit.ly/Qyu4lQ.

**A message from POWERJobs: The Home Depot is seeking a Manager of Government Relations for its Washington, D.C. office. The Manager of Government Relations will represent and advance The Home Depot's government relations agenda before elected officials and government decision-makers primarily at the state and local levels. They will prepare an annual action plan identifying key government relations objectives and priorities at the state and local levels that will benefit the company’s top and bottom lines and create shareholder value. Visit POWERJobs.com for more information.**

*** A message from Morgan Stanley: Storage makes renewable energy available when it’s needed the most. Given the U.S. electric grid’s lack of storage capacity, conventional power plants, including gas-fired ones, have remained utilities’ most reliable source of electricity. That could be about to change. Morgan Stanley analysts argue that the price of both solar and wind energy, as well as new storage units, have reached a point where renewable energy can finally become a dependable, rather than an unpredictable, source of energy. According to the report, the demand for storage is expected to grow from a less than $300 million a year market to as much as $4 billion in the next two to three years. More affordable battery storage units could enable the growth of renewables or defer costly transmission and distribution projects, and also could lead to significant utility bill savings for solar customers. Read more from Morgan Stanley. ***

Authors:

About The Author

Ben White is POLITICO Pro's chief economic correspondent and author of the “Morning Money” column covering the nexus of finance and public policy.

Prior to joining POLITICO in the fall of 2009, Mr. White served as a Wall Street reporter for the New York Times, where he shared a Society of Business Editors and Writers award for breaking news coverage of the financial crisis.

From 2005 to 2007, White was Wall Street correspondent and U.S. Banking Editor at the Financial Times.

White worked at the Washington Post for nine years before joining the FT. He served as national political researcher and research assistant to columnist David S. Broder and later as Wall Street correspondent.

White, a 1994 graduate of Kenyon College, has two sons and lives in New York City.